TORONTO – Rogers Communications may face opposition trying to go around federal restrictions that prevent it from acquiring small wireless carriers such as Wind Mobile and Mobilicity as it tries to block U.S telecom giant Verizon from entering the Canadian cellphone market.
A published report Friday said that Toronto-based private capital company Birch Hill Partners is working on a plan to buy a controlling stake in Wind Mobile with Rogers Communications Inc. (TSX:RCI.B). The report said Rogers would get an equity stake in Wind but contribute money and gain access to Wind’s spectrum to add to its own network.
While a spokesman for Industry Minister James Moore wouldn’t comment on the report, the government indicated that it wasn’t willing to change the rules it set out at the end of June.
“Any requests received by the department will be reviewed based on that framework,” spokesman Sebastien Gariepy said in an email.
Birch Hill has not responded to media requests for comment on the story and Rogers has also declined to comment.
Earlier this week, new Industry Minister Moore said Canada needs more competition in the wireless industry, repeating support for a policy that the Harper government has been promoting.
New government guidelines that were recently issued prevent Rogers, Telus and Bell (TSX:BCE) from scooping up unused spectrum or spectrum licences from small wireless companies without a federal review.
Industry Canada has said any wireless company that wants to transfer its spectrum licence will have be approved by the government following a review within 15 days of signing a new ownership agreement.
The federal government has already blocked Telus (TSX:T) from buying financially struggling carrier Mobilicity.
There have been reports that big U.S. carrier Verizon wants to enter the Canadian wireless market by purchasing small carrier Wind Mobile and was in talks to buy struggling company Mobilicity.
Foreign ownership restrictions for small wireless companies with less than 10 per cent of the wireless market have been loosened, which paves the way for Verizon and other foreign competitors to enter the cellphone market and buy up these players.
But Rogers, Telus and Bel have been complaining that they want a level playing field and should not be prevented from buying up these companies because of the rules.
The Financial Post is reporting that the board of directors of Wind’s majority owner, VimpelCom Ltd., is also set to meet next week and is said to be considering offers to buy the Canadian company.
The Post also said U.S. telecommunications giant Verizon Communications (NYSE:VZ) would discuss Wind at a meeting of its directors next week.